Cap-and-Trade Bill Passes House Energy Panel

May 22, 2009 at 6:10 PM EDT

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The House Energy and Commerce Committee approved Friday a cap-and-trade bill for greenhouse gas emissions. A reporter examines the bill's pros and cons and the state of the energy and climate policy debate.

JEFFREY BROWN: A divided House committee took a first step last night towards passing sweeping climate change legislation that would fundamentally alter the way the U.S. uses energy.

The bill, shepherded through the House Energy and Commerce Committee by its Democratic chairman, Henry Waxman, has as its centerpiece a so-called cap-and-trade plan. It would require power plants, oil refineries, and many types of manufacturers to obtain permits for the pollution they emit.

Most of the permits would initially be issued for free by the government. Companies looking to emit more or less could then trade those permits in a market.

This morning, House Speaker Nancy Pelosi called the bill a major breakthrough.

REP. NANCY PELOSI (D-CA), Speaker of the House: The House Energy and Commerce Committee passed what is transformational, something transformational in how we address the climate change issue.

JEFFREY BROWN: Among other goals of the 930-page bill, called the American Clean Energy and Security Act: reducing total climate-changing emissions from 2005 levels, a 17 percent cut by 20, and 83 percent lower by 2050; setting new efficiency standards for lighting, buildings, and industry; and mandating an increase in the use of renewable energy resources, like wind and solar power.

BARACK OBAMA, President of the United States: A green, renewable energy economy isn’t some pie-in-the-sky, far-off future. It is now.

First nationwide emissions limits

Dina Cappiello

Associated Press

This is a test case to say, hey, if it can pass this committee, it has a pretty good shot at passing the entire house when it's voted on later this year.

JEFFREY BROWN: President Obama campaigned on many of the planks in the bill, but the current version also contains financial incentives for industry that are not as tough as he pledged. Still, he praised the measure's passage in a statement last night.

And for more about the legislation and the larger political landscape it faces, we turn to Dina Cappiello, national environment reporter for the Associated Press.

Welcome.

DINA CAPPIELLO, Associated Press: Thank you.

JEFFREY BROWN: Why is this considered so important that it passed this House committee?

DINA CAPPIELLO: Well, a committee vote usually isn't that big of a deal.

JEFFREY BROWN: Right.

DINA CAPPIELLO: But in this case, it is. And the reason is that this is the first time a House panel has actually passed a bill that would set the first nationwide limits on greenhouse gases.

And secondly, what's significant, this is a very diverse House panel from very different regions with different industries. So this was a slog. And, you know, several weeks ago, there were some doubt as to whether they were going to have the votes.

JEFFREY BROWN: So this is important politically in terms of what happens in the future?

DINA CAPPIELLO: Absolutely. This is a test case to say, hey, if it can pass this committee, it has a pretty good shot at passing the entire house when it's voted on later this year.

JEFFREY BROWN: All right, now, it's a huge, complicated bill, but no question that the cap-and-trade component is the key provision people are watching, right?

DINA CAPPIELLO: Absolutely. I mean, the cap-and-trade component dominated the many, many hours of debate we saw this week on this legislation, largely because it is what is going to drive whatever cost increases we see in electricity prices and it's going to have the biggest effect on industries that use and produce fossil fuels.

JEFFREY BROWN: And you were there for all these hours this week.

DINA CAPPIELLO: I was there for the bulk of the debate.

JEFFREY BROWN: Did you see a lot of manipulating or positioning, I guess is the right word, among different industries, different geographical settings, everybody trying to get ahead of this?

DINA CAPPIELLO: Yes, I think what you saw was you saw congressmen from many diverse parts of the country with states that, you know, get their power from different sources, some from coal, protecting their interests in those states.

You know, if they were from agricultural states, they were concerned about how this would affect the agricultural community. You also saw Republicans were trying numerous times to basically kill the bill all together or to severely weaken it, and those were just fought back time and time again.

Compromises were already made

Dina Cappiello

Associated Press

Long before this debate began and the committee started to consider this bill, the chairman, Henry Waxman, and his subcommittee chairman, Ed Markey of Massachusetts, had worked out a deal to bring many moderate Democrats on board.

JEFFREY BROWN: Now, there were some compromises that made even in this -- in passage of this step, right?

DINA CAPPIELLO: Absolutely. I mean, long before this debate began and the committee started to consider this bill, the chairman, Henry Waxman, and his subcommittee chairman, Ed Markey of Massachusetts, had worked out a deal to bring many moderate Democrats on board. And in that deal, they had reduced the early targets for greenhouse gas emissions. Initially, they wanted 20 percent.

JEFFREY BROWN: This is for total emissions.

DINA CAPPIELLO: Correct, 17 percent now. And they also eased the requirement on renewable electricity to bring on some more moderate Democrats, which they needed to get this out of committee.

JEFFREY BROWN: What about the concession on the cap-and-trade permits? President Obama had always talked about wanting to auction off 100 percent of those permits.

DINA CAPPIELLO: Absolutely. And actually...

JEFFREY BROWN: But that's not to happen.

DINA CAPPIELLO: No. I mean, the president on the campaign trail and also in his budget proposal was planning on using the revenue from 100 percent auction of those permits -- something estimated near $650 billion -- to actually fund a middle class tax credit.

This bill would actually give 85 percent of those credits away for free to a variety of industries. And they did that for the sole purpose of, you know, assuaging some of the concerns of moderate Democrats who said, hey, listen, you know, the coal plants in my state are going to have a really hard time getting there if they have to buy these things and also reduce emissions. So that's exactly why it was done.

No unanimous support

Dina Cappiello

Associated Press

The environmentalists did endorse this last night, calling it historic, but sort of the lefter side of the environmental movement is a little unhappy. They say, hey, these concessions really weakened the targets.

JEFFREY BROWN: Now, there were some interesting divisions even within the particular sides, within the environmental community, for example, a lot of support, but not total support.

DINA CAPPIELLO: No, it's not unanimous. I mean, this is a very complex bill. It has a lot of parts. I don't think at the end of the day everybody is going to be happy, especially with a bill of this size.

The environmentalists did endorse this last night, calling it historic, but sort of the lefter side of the environmental movement is a little unhappy. They say, hey, these concessions really weakened the targets. The science says we need more reductions to avert some of the biggest consequences of global warming.

And they're very unhappy that a scheme that is designed to put a cost on carbon -- so actually, you know, industries actually are paying for what they're putting into the air -- is giving some of the pollution permits away for free.

JEFFREY BROWN: And similarly within the business community some splits?

DINA CAPPIELLO: There are some splits. Right now, remember, this bill that Waxman and Markey put out was actually based on a model by a group called the U.S. Climate Action Partnership.

That group includes the oil industry. It includes Chevron and Shell. It includes chemical manufacturers like DuPont and Dow. It includes G.M. and Chrysler. So there is some industry that is on board and is excited about this progress.

But there are some other groups that are a little upset about how many allowances they got for free. They didn't get enough; other people got more. They come into the program they think a little too early, and they're concerned about some of the prices and the burden on their own industry.

The oil refiners would be a perfect example. They're a little upset about this.

The president's role

JEFFREY BROWN: Now, we've referred to President Obama already. What role, though, is he playing at this stage?

DINA CAPPIELLO: At this stage, I mean, he brought in -- earlier this month, he called all of the Democrats, all 36 Democrats on the committee, to the White House when it looked like it was going to be tough going and said, Hey, guys, let's get consensus on this. This is a big part of my domestic agenda. I want to generate a clean-energy economy.

After that meeting, there was a big deal struck with a cash for clunkers provision in the bill that people would get rebates for turning in gas-guzzlers for more fuel-efficient cars.

Right now, I think that he's kind of on the sidelines and letting Waxman and Markey drive this and see where it goes. And I think that, in a statement last night, he said, Hey, this is a great start, and I'm really glad that you guys worked out a deal that got support from a lot of industries and a lot of varying regions of the country.

JEFFREY BROWN: Now, finally, just give us a little flavor of what's next, because this is going to be a long process, right?

DINA CAPPIELLO: I'm going to be really tired. No, this is going to be a very, very long process. From here -- this is a very big committee. It's a very powerful committee. From here, it's going to have to go to a lot more committees in the House, because of different jurisdictional issues.

For instance, one of the big things that's ahead is consideration in the Ways and Means Committee, which will actually figure out how lower- and middle-income families will actually see relief if energy prices increase.

And then it's going to go to the House floor. Then it's going to have to go to the Senate. And so this is a long, long process.

But the hope is, from the administration and from Democrats in Congress, to get this done by the end of the year, because in December the nations meet in Copenhagen to actually work out an international climate treaty.

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